Giant NZ Super fund hires first manager in novel $300-500m farm investment programme

Fund moves into what it says is an ‘under-developed’ asset class.

The NZ$16.2bn (€8.8bn) New Zealand Superannuation Fund has taken the first step in a major $300-500m programme of rural land investment by hiring FarmRight, a New Zealand-based specialist farm manager, to run the acquisition of a dairy property in West Otago on the country’s South Island. The move by the fund – one of the world’s most prominent responsible institutional investors – signals a shift into interesting direct investments away from the financial markets. The mandate will eventually mean the superannuation fund owns stakes in a portfolio of New Zealand farms. The fund is the sole 100% purchaser of the West Otago farm, which lies about 100km from Dunedin. FarmRight’s portfolio contains 42 dairy farms covering more than 12,000ha and 34,000 cows. The New Zealand scheme believes rural land is an under-developed asset class with strong scope for adding value through active management. The focus of its $300-500m programme, which it expects to execute over five years, will encompass all farming activities in majorfood-producing regions in the developed world. The fund is looking especially at New Zealand rural land of suitable scale or that can be aggregated to
achieve scale, as well as other capital constrained vendors in the sector. Matt Whineray, General Manager, Investments, for the Guardians of the superannuation fund, said: “We have appointed FarmRight after an extensive due diligence process, which included assessments of their ability to manage, among other things, profitable pasture-based farming systems, costs, health and safety, animal welfare, environmental compliance, and financial budgeting and reporting to the standard we require.”
Last year, the New Zealand fund said it was developing a strategy of ‘positive investment’ where social and environmental impact sits alongside investment performance. These, it said, would include its timber and infrastructure investments in which the fund has around NZ$2.5bn, or just under 16% of its total portfolio.